Candidate countries have, on average, sustained solid growth despite the
worsened international economic climate. Economic growth has only slightly
slowed down during 2002. Due to strong domestic demand, most candidate
countries showed resilience and the extent of the slowdown remained
limited. In the current year, growth should amount to 2.1% for the ten
acceding economies and 2.9% for all candidate countries. This represents a
slight downward revision from the Spring forecast. An expected return to
normal external and domestic developments should allow to reach average
growth of close to and beyond 4% in 2003 and 2004. Lower international
commodity prices and weaker growth have contributed to a further fall in
inflation in 2002. The expected further slowdown of inflation in 2003 and
2004 will be mainly the result of policy efforts to reduce inflation in the
high-inflation countries Romania and Turkey. Over the forecasting period,
employment losses due to continued enterprise restructuring should be
progressively compensated by higher employment creation and should lead to
a slightly improved overall labour market situation up to 2004. The
acceleration of export demand in 2003 and 2004 should prevent a significant
deterioration of external balances, even with strong domestic demand.
General government deficits remain relatively high as the combined result
of lower growth and counter-cyclical fiscal policies in some countries in
the early years and high transition-related expenditures over the whole
forecasting period.

The European Commission has proposed to grant €728 million to help relieve
damage caused by this summer's heavy floods. The first use of the newly
created European Union Solidarity Fund would free up €444 million for
Germany, €134 million for Austria, €129 million for the Czech Republic and
€21 million for France. The Solidarity Fund was set up in the space of
three months to allow for rapid financial assistance in the event of a
major disaster and is now fully in place. The Fund can be used, among other
things, to restore vital infrastructure and equipment. Today's proposals
require the approval of the European Parliament and the Council in their
role as Budgetary Authority to allow the Commission to start the payments
before the end of this year.

Preparation for enlargement is both a political and administrative priority
for the European Commission in 2003. The 2003 budget must provide the
necessary resources for the administrative preparations for enlargement. To
ensure this, while respecting the budgetary constraints on administrative
expenditure in the Financial Perspective, the Commission today took steps
to implement the European Parliament's proposal to "frontload" some
expenditure this year. Following an agreement reached in July between the
Commission, the Council and the Parliament, the Commission today adopted a
Preliminary Draft Supplementary and Amending Budget, allowing some
administrative expenditure initially planned for 2003 for each of the EU
institutions to be budgeted this year, thus providing the necessary finance
for additional posts in next year's budget.

[06] Commission proposes roadmaps to help Bulgaria and Romania on their way
to EU membership

As it had proposed on 9 October in its Strategy Paper and as requested by
the European Council in Brussels on 24-25 October, the European Commission
today presented roadmaps for Bulgaria and Romania to support the efforts of
these two candidate countries to achieve their objective of joining the
European Union in 2007. The purpose of the roadmaps is to indicate the main
steps that they need to take to be ready for membership. They identify in
detail the tasks ahead, with a particular emphasis on administrative and
judicial capacity necessary to implement the acquis and on economic reform.
To support these efforts, the Commission is also proposing a considerable
progressive increase in the European Union's financial assistance. The
roadmaps will be submitted to the Council of Ministers and to the European
Council in Copenhagen on 12-13 December.

[07] Commission launches investigation into possible aid for a further five
Land banks in Germany

The European Commission has initiated the formal investigation procedure in
another five cases of capital and asset transfers to Land banks in Germany
(Landesbank Schleswig-Holstein, Hamburgische Landesbank, Norddeutsche
Landesbank, Landesbank Hessen-Thüringen and Bayerische Landesbank). In the
course of the 1990s these banks received from their Land authorities
capital deposits in the form of transfers of Land assets such as mortgage
credit bodies. The deposits increased the Land banks' own funds, the level
of which crucially determines their lending capacity. An increase in own
funds thus allowed the Land banks to expand their lending substantially.
Private banks, which have to raise capital on the capital market on normal
market terms, had complained that the Länder concerned made available
capital of their own on more favourable terms. The lower costs of financing
own funds conferred on the Land banks a significant competitive advantage.
According to a preliminary assessment by the Commission, the Land banks had
not paid an appropriate remuneration for the capital transferred.
Accordingly, the Commission does not at the moment rule out the possibility
that the Land banks received aid and that competition was distorted to
their advantage.

The European Commission decided that part of the aid proposed by Germany in
favour of the Capro Schwedt GmbH for the construction of a new caprolactam
complex exceeds the maximum amount allowable under the specific rules for
regional state aid to large investment projects. Germany may subsidise the
project with up to 21.00% of the investment costs, i.e. to the amount of
roughly €69.5 million, instead of the initially notified 28% aid intensity
corresponding to €92.7 million.

The European Commission has decided to approve the Danish income tax
reduction measures for seafarers on board Danish vessels registered either
in the ordinary register (DAS) or in the second register (DIS).

The European Commission has approved four aid schemes aimed at compensating
Italian fishermen who had to temporarily cease their fishing activities in
2000, 2001 and 2002. Two of the schemes were subject to a formal
investigation procedure by the Commission. The first one related to aid for
fishermen and shellfish producers affected by the presence of mucilage in
the Adriatic in 2000. The second one concerned technical stoppages to
protect fish resources in the Tyrrhenian and Ionian Seas, also in 2000.
They amounted to €29.1 million in the Adriatic and €1.5 million in the
Tyrrhenian and Ionian Seas. The other two aid schemes, which had been set
up within the framework of a plan for the protection of aquatic resources,
related to aid for temporary cessation of activities in 2001 and 2002 to
allow fish stocks to grow. These two schemes totalled €13.9 million for
2000 and €10 million for 2002. The Commission considers these four aid
schemes compatible with Internal Market rules.

To mark World Diabetes Day on 14 November, European Health and Consumer
Protection Commissioner David Byrne warned of an alarming rise in diabetes
in the European Union. "The estimated prevalence of diabetes has increased
by nearly 20% over the past decade. This represents a major public health
challenge for the EU and its Member States. The new EU public health action
programme for 2003-2008 will enhance the ability to track and analyse
disease trends. The Commission will play a positive role in helping Member
States analyse why this alarming rise in diabetes has occurred, and how it
can be addressed". The EU is already funding projects looking at two of the
main risk factors for diabetes : diet and physical exercise. For
information on these projects see : http://europa.eu.int/comm/health/ph/programmes/health/pub/index_en.html.
This year's Diabetes Day focuses on the theme "Your eyes and diabetes:
Don't lose sight of the risks". For information on World Diabetes Day and
events being organised to mark it, including an event in the European
Parliament by the International Diabetes Federation on 19-21 November, see:
http://www.idf.org/home/index.cfm?node=355

[13] Business organisations join the Commission in growing call for urgent
hike in research spending

European business leaders today added their voices to calls for increased
research efforts to strengthen EU competitiveness, economic growth and
employment. The call came during a panel discussion in the framework of the
"Research 2002" conference in Brussels organised by the Union of Industrial
and Employers' Confederations in Europe (UNICE) on "Challenges for lifting
European R&D expenditure from 1.9% to 3% of GDP". The 3% objective was set
by the March 2002 Barcelona European Council. The panel featured European
Research Commissioner Philippe Busquin; UNICE President Georges Jacobs;
Michel Deleau, Director at the European Investment Bank (EIB); Daniel
Janssen, Chairman of the European Round Table of Industrialists (ERT)
Competitiveness Working Group; Fred von Dewall Chief Economist of the ING
Group; and Yannis Tzavaras, General Manager of new ventures at Intracom.

[15] Commission and US conclude negotiations on new cereal import regime

The European Commission and the United States have agreed on a new regime
for imports of medium and low quality wheat, and barley. For medium and low
quality wheat a tariff rate quota (TRQ) of 2,981,600t will be open,
starting on 1 January 2003. The US will benefit from a country allocation
of 572,000t. The duty will be 12€/t in the quota. Outside the quota the
duty will be kept unchanged at 95€/t. For barley one quota of 50,000t will
be open for malting barley, with a duty of 8€/t, and another quota of 300,
000t with a duty of 16€/t will be open for other barley. Outside the quotas
the current duty of 93€/t will be kept unchanged. Both quotas will start on
1 January 2003 as well. For all the other cereals, the current system to
calculate EU import duties, which takes US Commodity Exchange quotations as
representative for world cereal market prices, remains in place. The deal
has still to be approved by the EU Member States.

[17] Trade in services : EU launches public consultation on requests for
access to the EU market

In the context of the on-going negotiations under the Doha Development
Agenda, and with a view to preparing the EU's initial offer to be submitted
next March, the EU is now launching a wide public consultation on the
requests from other WTO members for improved access to the EU services
market. European Trade Commissioner Pascal Lamy indicated : "Since I took
office in 1999 I have been committed to being transparent and to engage in
a continuous dialogue with all interested parties on trade issues. It is
only if we have a broad debate with all stakeholders about the issues, real
or perceived, raised by trade liberalisation that we can garner the support
necessary for carrying these important negotiations to a successful
conclusion. This consultation is part of my commitment to transparency and
dialogue and is aimed at seeking public input into how the EU should
respond in its initial offer to the request it has received from third
countries. I therefore invite all interested parties to study this document
and let us know their views on the issues at stake before 10 January 2003."